🚨 APEC Trade Ministers Meeting Reaffirms Multilateral Trade Principles: WTO Recovery and Protectionism Prevention

Today Korean Economic News | 2025.05.19

📌 APEC Trade Ministers Meeting in Jeju: 21 Countries Unanimously Call for WTO Recovery

💬 At the Asia-Pacific Economic Cooperation (APEC) Trade Ministers Meeting held in Jeju, 21 member countries unanimously adopted a joint statement. This statement emphasizes the importance of the multilateral trade system and World Trade Organization (WTO) recovery, while expressing shared concerns about rising protectionism. Despite differences between the United States and China, the meeting reached a final agreement through South Korea's mediation efforts.

1️⃣ Easy Understanding

As the global economy faces challenges, many countries are trying to protect only their own industries. In this situation, 21 Asia-Pacific countries came together to reconfirm their promise to 'trade together.'

APEC (Asia-Pacific Economic Cooperation) is an economic cooperation group with 21 member countries including the United States, China, Japan, and Russia. Together, these countries account for 60% of global GDP and 50% of world trade, giving them enormous influence.

In recent years, 'protectionism' has been spreading, where countries raise tariffs or limit imports to protect their domestic industries. The ongoing trade conflict between the United States and China has made the global trade environment worse.

At this APEC Trade Ministers Meeting, countries agreed to revive the functions of the WTO (World Trade Organization) to solve these problems. The WTO plays a role in fairly resolving trade disputes between countries, but recently it hasn't been working properly because the United States blocked the appointment of appellate body members.

South Korea, as the host country, played a mediator role between the United States and China. Initially, agreement was difficult due to differences between the two countries, but through South Korea's diplomatic efforts, all 21 countries finally created a joint statement that everyone agreed on.

This APEC agreement is an important achievement showing the international community's support for free trade amid rising protectionism. However, whether countries will actually keep their promises is something we need to watch in the future.

2️⃣ Economic Terms

📕 APEC (Asia-Pacific Economic Cooperation)

APEC is an economic cooperation group of 21 countries in the Asia-Pacific region.

• Established in 1989, it holds annual summits and various ministerial meetings.
• Member countries include South Korea, the United States, China, Japan, Russia, Australia, Canada, and 14 others.
• It represents a huge economic bloc accounting for 60% of global GDP and 50% of world trade.

📕 WTO (World Trade Organization)

WTO is an international organization that sets international trade rules and resolves disputes.

• Established in 1995, it currently has 164 member countries.
• It promotes tariff reductions and removal of trade barriers based on free trade principles.
• It mediates and resolves trade disputes between member countries.

📕 Protectionism

Protectionism is a policy of imposing high tariffs on imports or limiting imports to protect domestic industries.

• It has the effect of protecting domestic companies and jobs, but causes friction with other countries.
• Protectionism has been spreading recently due to US-China trade war and COVID-19.
• If it spreads globally, it can lead to reduced trade volume and slower economic growth.

📕 Multilateral Trade System

The multilateral trade system is a system where multiple countries participate together to set trade rules and promote free trade.

• It refers to the global trade order centered on the WTO.
• The principle is to provide equal trading opportunities to all countries.
• Recently, the multilateral trade system is facing crisis due to protectionism.

3️⃣ Principles and Economic Outlook

✅ Background and Problems of Rising Protectionism

• Let's look at why protectionism is spreading in various countries and the resulting problems.

  • First, economic instability and job crises are major causes of protectionism. After the 2008 global financial crisis, countries began prioritizing their own economic recovery. As manufacturing jobs moved overseas, domestic workers' dissatisfaction grew, and politicians adopted protectionist trade policies in response. Former US President Trump's "America First" policy with significant tariff increases is a typical example. The COVID-19 pandemic accelerated this trend further. Countries tried to reduce dependence on overseas suppliers for medical supplies and essential materials, implementing policies to increase domestic production and limit imports.

  • Second, US-China conflict acted as a catalyst for protectionism expansion. China's rapid economic growth and technological advancement were seen as challenges to US dominance. The two countries started a trade war in 2018, imposing hundreds of billions of dollars in tariffs on each other. This developed beyond simple trade disputes into competition connected to advanced technology and national security. As conflicts deepened in key technology areas like semiconductors, artificial intelligence, and 5G, the term 'tech cold war' emerged. This caused global supply chains to fragment, forcing other countries to choose sides.

  • Third, protectionism negatively affects the global economy. Tariff increases ultimately make consumers pay higher prices and reduce corporate competitiveness. According to the International Monetary Fund (IMF), the US-China trade war caused global economic growth to fall by 0.8 percentage points in 2019. Trade uncertainty also reduced corporate investment. Global supply chains are being reorganized to prioritize safety over efficiency, increasing costs. Developing countries are particularly affected as access to developed country markets becomes more difficult, hurting their economic growth.

• While protectionism can protect domestic industries in the short term, it reduces overall economic efficiency and hinders innovation in the long term. Therefore, it's important for the international community to cooperate in maintaining free trade principles and creating fair competitive environments.

✅ The Need for WTO Reform and Its Direction

• Let's examine why World Trade Organization (WTO) reform is necessary and in what direction it should proceed.

  • First, the WTO's dispute resolution mechanism is not functioning properly. One of the WTO's most important roles is fairly resolving trade disputes between member countries. However, the appellate body has been paralyzed since 2019. The United States has continuously blocked the appointment of appellate body members, leaving insufficient members. The US maintains that the WTO makes too many unfavorable decisions against America and won't cooperate in member appointments without system improvements. This makes final resolution of trade disputes difficult, and countries increasingly take unilateral retaliatory measures. This undermines confidence in the entire WTO system.

  • Second, WTO rules don't properly reflect changing global economic realities. Current WTO rules were created based on the economic environment when it launched in 1995. However, there's insufficient response to new changes like rapid digital economy growth, spread of state capitalism, and rising environmental and sustainability issues. Particularly, as state capitalist economies like China compete with market economies, a new definition of 'fair competition' is needed. There are ongoing criticisms that regulations are inadequate for state subsidies to companies or market distortions through state-owned enterprises. International rules for new trade issues like e-commerce, data movement, and digital taxes haven't been established either.

  • Third, various measures for WTO reform are being discussed. First, restoring dispute resolution functions is the most urgent task. Major improvement measures include improving appellate body member appointment procedures, shortening hearing periods, and ensuring consistency in precedents. The EU and China operate temporary appellate arbitration systems, but fundamental solutions are difficult without US participation. For rule modernization, digital trade agreements, strengthened subsidy regulations, and environmental trade rules are being considered. Adjusting developing country special treatment standards to reality and making decision-making processes more flexible are also under discussion.

• WTO reform isn't simply fixing the existing system, but creating a new trade order suitable for the 21st century global economy. This requires political will and compromise from major countries, especially cooperation between the United States and China.

✅ Future of Asia-Pacific Regional Economic Cooperation

• Let's look at how economic cooperation in the Asia-Pacific region centered on APEC will develop.

  • First, the Asia-Pacific region is expected to rise further as the center of the global economy. This region already accounts for 60% of global GDP and 40% of world population, making it a huge economic bloc. With continued growth in China and India and rapid development in Southeast Asian countries, this proportion is expected to grow even more. According to the Asian Development Bank (ADB), Asia's share of global GDP is projected to exceed 50% by 2030. As intra-regional trade increases, an 'Asia-centered global economy' is likely to form. Trade between Asian countries already exceeds trade between Asia and other regions.

  • Second, digital economy and green economy cooperation will become new growth drivers. Digital transformation accelerated after COVID-19, and digital trade is growing rapidly in the Asia-Pacific region. As e-commerce, digital payments, and online services spread quickly, creating related rules and standards has become important. APEC is already strengthening cooperation in this area through agreements like the Digital Economy Partnership Agreement (DEPA). Green economic transition to respond to climate change is also a major task. Carbon border taxes, eco-friendly technology transfer, and sustainable supply chain construction are emerging as new trade agendas. Asian countries are expanding cooperation in renewable energy, electric vehicles, and green hydrogen.

  • Third, regional economic integration is expected to deepen further. The Asia-Pacific region currently has several free trade agreements including CPTPP (Comprehensive and Progressive Trans-Pacific Partnership) and RCEP (Regional Comprehensive Economic Partnership). APEC is promoting the 'Free Trade Area of the Asia-Pacific (FTAAP)' concept to connect these agreements into a larger free trade area. However, complete integration seems difficult due to US-China conflicts, different economic development levels among countries, and political differences. Instead, a 'practical integration' approach expanding cooperation by sector and stage is likely. Supply chain resilience strengthening, infrastructure connectivity improvement, and labor mobility liberalization are expected to be prioritized.

• Economic cooperation in the Asia-Pacific region will continue developing despite challenges from US-China conflicts and protectionism. However, it's important to minimize political conflicts' impact on economic cooperation and create an inclusive growth model where all countries can participate.

4️⃣ Conclusion

The unanimous agreement at this APEC Trade Ministers Meeting is a meaningful achievement showing the international community's support for free trade amid rising protectionism. However, what's really important is actually keeping these promises.

US-China conflicts and protectionist policies in various countries are structural problems that won't be solved quickly. The temptation for countries to choose nationalist policies due to domestic political pressure still exists. Therefore, the role of multilateral cooperation bodies like APEC becomes even more important.

WTO reform is also an urgent task. Along with restoring dispute resolution functions, rules reflecting new trade realities like digital economy and environmental issues must be created. This especially requires concessions and compromises from the United States and China.

Economic cooperation in the Asia-Pacific region is expected to continue developing. Cooperation in digital and green economy sectors will become new growth drivers, and gradual integration through practical approaches will proceed.

Ultimately, proving that free trade and multilateral cooperation benefit all countries is most important. We must show that trade increases jobs, grows economies, and allows consumers to enjoy better goods and services. For this, inclusive growth policies ensuring trade benefits reach more people rather than concentrating on a few must be pursued together.